MAP：Waiting for Autumn Demand
Recently, China’s mono ammonium phosphate (MAP) market stays steady. Restrained by high production costs and sluggish downstream demand, the market remains in a stalemate. Local inquiries edge up slightly, yet downstream buyers require low prices and only place small scale rigid demand orders. Later stage market trends hinge on autumn wheat fertilizer sales and the operation rate of compound fertilizers facilities.
Agri. grade MAP sees narrow price swings. EXW price for 55% powder in Hubei range from CNY4,350-4,450/t. Supply covers both high price for guaranteed-supply and low-price for traders on market, and real transaction prices are negotiable. Slow autumn fertilizer sales and piled up compound fertilizer inventory make downstream buyers become more cautious. Price cutting sentiment restrains spot prices, while depleted low cost stocks and steep raw material costs prompt traders to hold prices firm.
Sulfur constitutes the primary cost constraint. One ton of MAP consumes 0.45 ton of sulfur. Based on the Yangtze Port sulfur pick up price of CNY9,150/t on August 7, MAP manufacturers suffer a loss close to CNY2,000/t. Even guaranteed supply enterprises gain slim profits owing to expensive outsourced sulfur. Sulfur prices are expected to drop in the following three months yet stay above CNY7,000/t, keeping MAP production costs over CNY5,000/t.
Demand conditions are decided by compound fertilizer operation rate and autumn fertilizer preparation progress. The industry operation rate hit 31.37% on August 6 with a minor WoW drop. The stocking window for winter wheat base fertilizer shrinks, and concentrated demand is anticipated in mid August. Two uncertainties lie in farmers’ acceptance of pricey fertilizers and the sales & shipments performance of finished compound fertilizers.
In-factory inventory and market inventory affect market shifts. Major compound fertilizers producers have ample raw materials inventory and delayed bulk purchases. Poor autumn fertilizers reserves will transmit inventory pressure and drag down spot prices, whereas fast inventory digestion from peak seasonal demand will boost the market.
Costs set a bottom line support for MAP. Improved compound fertilizers operation rate and brisk autumn fertilizer shipments in late August may lift trading activity. Nevertheless, inventory pressure, costly raw materials and limited downstream affordability may keep the market weak and fluctuating.
